Stock prices of weapon companies and political conflict.

This paper studies the empirical relationship between political conflict and the stock rices of arms-producing companies. This topic is important as we seek to provide a general explanation of the benefits to arms-producing companies in relation to worldwide conflicts. We focus on the ten largest ar...

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Main Authors: Ho, Clarrisa Yen Yee., Pek, Ruo Wei.
Other Authors: Yothin Jinjarak
Format: Final Year Project
Language:English
Published: 2010
Subjects:
Online Access:http://hdl.handle.net/10356/38541
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Institution: Nanyang Technological University
Language: English
id sg-ntu-dr.10356-38541
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spelling sg-ntu-dr.10356-385412019-12-10T11:38:23Z Stock prices of weapon companies and political conflict. Ho, Clarrisa Yen Yee. Pek, Ruo Wei. Yothin Jinjarak School of Humanities and Social Sciences DRNTU::Social sciences::Military and naval science This paper studies the empirical relationship between political conflict and the stock rices of arms-producing companies. This topic is important as we seek to provide a general explanation of the benefits to arms-producing companies in relation to worldwide conflicts. We focus on the ten largest arms-producing companies listed on the SIPRI Top 100 for 2007, and conduct an event study on this relationship. We find that 3 out of the 10 companies display significant abnormal returns. This finding is corroborated by results from regressions on raw returns and cumulative abnormal returns around a 5-day window. We gather that conflict date and intensity show opposing effects, with positive returns for conflict intensity dominating for the 3 significant companies in the top 10. This interesting finding could be due to countries being embroiled in longstanding conflicts, hence the intensification of the conflict affects the demand for arms more than an onset of a new conflict would. We interpret our findings in the light of rampant corruption and bribery in the industry, and a merger policy that sparked off a wave of change in the defense industry landscape in 1993. We also recognize the limitations we face in the course of our study. Bachelor of Arts 2010-05-11T04:14:56Z 2010-05-11T04:14:56Z 2010 2010 Final Year Project (FYP) http://hdl.handle.net/10356/38541 en Nanyang Technological University 39 p. application/pdf
institution Nanyang Technological University
building NTU Library
country Singapore
collection DR-NTU
language English
topic DRNTU::Social sciences::Military and naval science
spellingShingle DRNTU::Social sciences::Military and naval science
Ho, Clarrisa Yen Yee.
Pek, Ruo Wei.
Stock prices of weapon companies and political conflict.
description This paper studies the empirical relationship between political conflict and the stock rices of arms-producing companies. This topic is important as we seek to provide a general explanation of the benefits to arms-producing companies in relation to worldwide conflicts. We focus on the ten largest arms-producing companies listed on the SIPRI Top 100 for 2007, and conduct an event study on this relationship. We find that 3 out of the 10 companies display significant abnormal returns. This finding is corroborated by results from regressions on raw returns and cumulative abnormal returns around a 5-day window. We gather that conflict date and intensity show opposing effects, with positive returns for conflict intensity dominating for the 3 significant companies in the top 10. This interesting finding could be due to countries being embroiled in longstanding conflicts, hence the intensification of the conflict affects the demand for arms more than an onset of a new conflict would. We interpret our findings in the light of rampant corruption and bribery in the industry, and a merger policy that sparked off a wave of change in the defense industry landscape in 1993. We also recognize the limitations we face in the course of our study.
author2 Yothin Jinjarak
author_facet Yothin Jinjarak
Ho, Clarrisa Yen Yee.
Pek, Ruo Wei.
format Final Year Project
author Ho, Clarrisa Yen Yee.
Pek, Ruo Wei.
author_sort Ho, Clarrisa Yen Yee.
title Stock prices of weapon companies and political conflict.
title_short Stock prices of weapon companies and political conflict.
title_full Stock prices of weapon companies and political conflict.
title_fullStr Stock prices of weapon companies and political conflict.
title_full_unstemmed Stock prices of weapon companies and political conflict.
title_sort stock prices of weapon companies and political conflict.
publishDate 2010
url http://hdl.handle.net/10356/38541
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